Products & Services

Group Life Insurance

An employer may want to consider setting up a group life insurance plan as part of their employee benefit plan. Often this is the best way for employees to obtain life insurance coverage, coverage that they may never had sought out on their own. As an employer you can have the reassurance that your employee’s families will be taken care of financially in the event one of them were to die.

Group policies are structured with the employer buying a master policy and then issuing certificates to the participating employees. Many employee unions and trade associations make group life insurance available to their members. Generally the insurance is issued as a term policy renewed each year, although it can be structured as a permanent policy as well. This is generally a benefit that the employer will provide and pay the cost of, but employees can also share the cost with the employer.

Benefits of a group life insurance plan are that there is group underwriting. Individuals do not have to be underwritten separately under the plan. Also it is guaranteed issue coverage; no employee can be excluded from participation due to a pre-existing health concern. If an employee decides to leave the employer their coverage can be converted to an individual policy, without having to undertake health examinations to prove insurability. An employee would have 30 days to complete the conversion to an individual policy and the new policy would be based on their age at time of separation from the company.

These plans can also include a disability benefit. This allows an employee who has become disabled, and who is less than 60 years of age, to continue coverage with a waiver or premium for as long as they are disabled. Death benefits are structured so that employee families are eligible to receive the benefit even if the employee was only employed for a short period of time. Generally these are based on salary and often paid in multiples of 1 to 2.5 times the salary earned, with up to 6 times the earnings paid in the event that an employee dies while on company business.

Souces: Dictionary of Insurance Terms, 5th edition, by Harvey W. Rubin, Ph.D., CLU, CPCU, published by Barron's Educational Series, Inc.
Plans and coverage may vary and it is best to discuss your options with an employee benefits agent.